MGM Mirage, the biggest casino owner on the Las Vegas Strip, reported a first quarter profit from the sale of a casino. Shares extended gains after the company said business was stabilizing.
Net income dropped 11 percent to US$105.2 million, or US$0.38 a share, from US$118.3 million, or US$0.40, a year earlier, the Las Vegas-based company said in a statement yesterday. The results included a gain of US$0.44 from the sale of Treasure Island.
Revenue tumbled 20 percent to US$1.5 billion from US$1.88 billion a year earlier. MGM Mirage is selling rooms at steep discounts through Web sites such as Orbitz to attract tourists in the city’s worst gambling slump on record. The worst may be over, chief executive officer Jim Murren said.
“Cancellations have tapered off and we see signs that business levels seem to be stabilizing,” Murren said in a statement.
Hotel occupancy was “unusually low in January, improved in February, and returned to a normalized level of approximately 95 percent in March,” MGM Mirage said.
MGM Mirage advanced 4.5 percent to US$9.86 in extended trading. Earlier, the shares rose US$1.58, or 20 percent, to US$9.44 at 4pm in New York Stock Exchange composite trading.
The shares have surged fourfold since the end of March. The rise includes a 53 percent increase since April 29, when MGM Mirage and partner Dubai World reached an agreement with banks that will allow them to finish construction the US$8.5 billion CityCenter project on the Las Vegas Strip.
MGM Mirage also resolved a lawsuit with Dubai World over CityCenter and won more time from lenders to restructure its corporate finances.
The company, with more than US$14 billion in debt at the end of the quarter, is considering all options, including asset sales and debt buybacks as it restructures, and has enough unencumbered assets to raise more capital, Murren said in an interview last Wednesday.
Wynn Resorts Ltd and Las Vegas Sands Corp, MGM Mirage’s two biggest Strip competitors with publicly traded shares, both report first-quarter earnings today.
MGM Mirage has nine casinos on the Las Vegas strip. The company, controlled by Kirk Kerkorian, was offering rooms through Orbitz last month starting from US$81 at Mirage and from US$139 at its highest-end resort, Bellagio.
Convention attendance fell 29 percent in the first two months of the year, the Las Vegas Convention & Visitors Authority said.
The revenue MGM Mirage gets for each available room in Las Vegas, a measure of rates and occupancy called Revpar, fell 34 percent in the quarter to US$102.
Las Vegas Strip casino gambling revenue tumbled 23 percent in February.
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